Sushi Money

The energy debate has sparked many emotions and new ideas for how the U.S. can become more independent from foreign sources of oil.  There are no easy solutions and it’s becoming more challenging for consumers when we read that that for the 2008-2009 U.S. winter heating season, the government’s Energy Information Administration (EIA) is forecasting that heating oil costs will rise 31% and natural gas costs will rise 22% compared to last year.  Those numbers are staggering.  For someone paying $250 a month for heating oil or gas, their bill will increase $77 and $55 per month this winter, respectively.   Some are calling the Northeast “heating oil hell” based on cost estimates for the coming winter.   And some oil suppliers may have a difficult time staying in business. 

The higher costs of using heating oil has prompted many consumers to switch to natural gas heating systems.  Making the switch can be expensive, but if you’re going to be in the home for a few years or more, it may well be worth the investment.   But get in line because dealers are already swamped with back-logged customers. 

What we’re really seeing across the nation are consumers rushing to find cheaper ways to pay for winter energy costs.  And what’s the big focus this year?  Wood heat.  Good ‘ole firewood, wood pellets and other alternative ways to produce heat at home.  I can tell you first hand that heating with wood is a very satisfying way to keep the house warm in winter. There’s something about a nice warm fire in a wood stove that feels secure, and knowing that if the power goes out you still have some heat in the house.  At least with a traditional wood stove or insert.  Pellet stoves are great too, but usually need electricity for the components to work. 

And we even found out that our wood stove served as a back-up plan for heat during an ice storm a couple winter’s ago, with a few financial analogies to go with it.  Of course you need to have a supply of wood or pellets on hand to have that heat, and a community that allows burning of wood.  Most communities do so it’s not an issue.  But finding a good supply of wood products is something you want to do earlier in the year, like right now for example.  As the WSJ article above cites, suppliers are in a mad rush to fill orders for stoves and equipment that consumers want.  And firewood demand in some regions is at an all-time high.

For electric power it would be great to have a small (quiet!) home wind generator near the house generating power day and night.  But you need land, wind and a community that supports the installation of the wind turbine.  Most of us live where those needs are not easily accomodated.

Our primary heat sources at home are electric and propane. In years past, propane (like natural gas) was the cheaper alternative to electric heating.  Now electric heating costs less overall but is still becoming more expensive.  We have a significant cold season, and in recent years have begun heating more with wood to supplement the electric and propane heating.  Supplmenting our traditional heating needs has reduced the monthly cost of our energy bill significantly.

When we see the alternative energy debate in the media, wind power is rapidly becoming a favored approach in regions that can support it.  We don’t hear as much about solar because it’s arguably so expensive (and complex) to install for most consumers.  But it’s getting simpler, and when it becomes affordable enough a lot of us will have solar panels on our rooftops to help defray the costs of electricty.  That’s something most of us cannot do with wind power. 

So is wind power a viable long-term alternative? It probably depends upon where you live, and how it’s developed.  ABC news has examined how wind power is changing energy use in the Great Plains, or the “Wind Belt” as some name the region.  

Today, the biggest source of electricity is coal, accounting for nearly half of all power generation in 2006, according to the Department of Energy. Natural gas and nuclear power each accounted for another 20 percent, and hydroelectric another 7 percent. All forms of renewable energy — that includes wind, solar and biomass — accounted for just 2 percent of all electricity production. Compare that to Denmark, where wind makes up nearly 20 percent of country’s power needs.

Wind is the fastest-growing form of energy. Thanks to projects like the one in Trimont, the amount of wind power in the United States nearly tripled between 2003 and 2007.

What are the benefits of wind power for communities in these areas?   In the article cited, 50 farmers in Minnesota signed on for 67 wind turbines over more than 8,000 acres, and receive thousands of dollars per year in leasing and operations fees for joining the project.   Those turbines can power almost 3o,000 homes and provide a source of tax revenue for the community, schools, etc.  In some areas, electric bills have been frozen for a decade or more.  But they are a unique agricultural community in a higher wind area, next to power transmission lines and with an energy company that was looking for a project of this type.

Wind power is not for everyone and won’t answer most of our energy needs.  Of course harnessing a little of that “hot air” out of Washington D.C. might not be a bad idea either!   Realistically, where and how a wind turbine is installed depends on state and local laws, and not everyone is in favor of having a giant metal propellor spinning 24 hours of day in their backyard.  The debate also involves questions about people becoming sick from wind turbine noise pollution and other effects, something scientists are trying to understand more clearly.  So along with the positive aspects of almost “free energy” there are other land-use issues to consider.  To learn more about wind power and consumer options, the American Wind Energy Association provides a wealth of information.

So the search for alternatives continues.  Many people do not have the choice or opportunity to heat with wood or other alternative means during the winter.  If you have an electric or oil-based furnace or heat with natural gas, that may be the only way your home can be kept warm.  But if you live in an area where you can use a wood burning stove or fireplace insert, and can afford the costs of a new system and purchase a supply of wood, it may be well worth it over the long run.

Otherwise,  it’s important to budget now for the much higher energy bills coming this winter.  I’ve estimated we’re going to pay $200 to $400 more for our energy costs this year.   Do you have any idea how much more you’ll be paying, and have you looked at that with the budget?

It’s a question we all must examine, especially if oil prices stay high through the end of the year.  Even if prices for oil continue to drop, worldwide demand is only going to increase.  And from an investment viewpoint, even Barron’s believes oil stocks are undervalued with a rebound coming soon.  

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